June 12, 2023 MONDAY ISSUE- 280

THE ECONOMICS HUB

School's Column

To Be Continued...
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 QUICK GLANCE

Economic lexicon
Authoritarian capitalism
Usually applied especially to China and Russia, this
describes economies in which big business co-
exists with an authoritarian government.
Businesses are allowed to make money but if they
dare to criticise the government, or appear too
independent, they may face criminal or financial
sanctions.
India's forex reserves are up $5.9 billion to
$595.1 billion as on June 2
•India's foreign exchange reserves saw a rise of $5.929 billion and
stood at $595.067 billion as on June 2, 2023

•India's forex reserves hit a one-month low as they declined $4.339

billion to $589.138 billion in the week that ended on May 26, 2023

• The changes in foreign currency assets, expressed in dollar terms,

include the effects of appreciation or depreciation of other currencies
held in the RBI's reserves.

•India's gold reserves rose by $655 million, taking the overall levels to
$45.557 billion. Meanwhile, SDRs fell by $6 million, to $18.186 billion

• The rupee ended at 82.4625 to the U.S. dollar, compared with 82.5625
in the previous session.
• In October 2021, the country's foreign exchange reserves touched an
all-time high of about USD 645 billion. Much of the decline since then
can be attributed to a rise in the cost of imported goods in 2022.

•The forex reserves had fallen largely because of the RBI's intervention
in the market to defend the depreciating rupee against a surging US
dollar.
•RBI intervenes in the market from time to time, through liquidity
management, including through the selling of dollars, to prevent a steep
depreciation in the rupee.
•The RBI closely monitors the foreign exchange markets and intervenes
only to maintain orderly market conditions by containing excessive
volatility in the exchange rate, without reference to any predetermined
target level or band.
Oil prices fall after US-Iran nuclear deal
speculation
A drop in oil prices was observed following speculation from various media
sources regarding a US-Iran deal which could impact Iran's oil exports. Oil is
down 10% this year as China's sluggish economic recovery, interest rate hikes
from the Federal Reserve and robust Russian crude flows weigh on prices. In an
attempt to rally prices, Saudi Arabia has pledged to cut over 1 million barrels a
day on top of cuts made by the OPEC earlier this year.
What would be the effects observed? Formerly OPEC's No. 2 producer, Iran
could restore about 1 million barrels of
daily crude production within months of a deal, according to statements made
by traders and analysts the previous year. It could be back to full capacity of
about 3.7 million barrels a day by next year.
Any agreement to restore the 2015 nuclear deal, would likely include the US
waiving sanctions on purchases of Iranian oil, potentially releasing a flood of
exports.

Tata Group signs $1.6 bln electric vehicle

battery plant deal
India's Tata Group signed an outline deal on Friday on building a lithium-ion cell
factory, based on investment of about 130 billion rupees ($1.58 billion), as part
of the nation's efforts to create its own electric vehicle supply chain.
Compared to the size of its population, India's car market is tiny. Tata Motors
dominates its electric vehicle (EV) sales, which made up just 1% of India's total
car sales of about 3.8 million last year.
A joint statement on the memorandum of understanding, between Tata's unit
Agratas Energy Storage Solutions and the government of the western state of
Gujarat, said work on the plant, to be based in Sanand, northern Gujarat, was
expected to start in less than three years.
It would have initial manufacturing capacity of 20 Gigawatt hours (GWh),
which could be doubled in a second phase of expansion, the statement said.
"The plant will go a long way in contributing to the development of the EV
ecosystem in Gujarat and India," Vijay Nehra, an official in the Gujarat state
government told Reuters.
 ODISHA's State Level Single Window Clearance
Authority (SLSWCA)

The Odisha government has approved 18 investmentproposals worth Rs 3,457 crore which
will generate employment for at least 14,436 people, an official said.
The proposals were approved at the State Level Single Window Clearance Authority
(SLSWCA) chaired by chief secretary P K Jena on Thursday. The panel also recommend two
Industrial projects to HLCA (High-Level Investment Authority), the official said.
Ten out of 18 investment proposals were received during the Make in Odisha Conclave 2022.
This showcases the immense success of the conclave in attracting investments and
reinforcing Odisha's rank as second among the states in attracting ongoing investments in
the 2022-23 fiscal, the official claimed.
Stating that the state government is committed to converting the investment intents into
ground reality, the official said projects spread across diverse sectors like metal downstream
and ancillary, pharmaceutical, food processing, cement, textile and apparel, IT and ESDM,
and Agro Processing received approvals in the SLSWCA meeting.

Canada Pension Fund to sell 1.6% stake

in Kotak Mahindra Bank tomorrow
Canada Pension Fund will likely sell a partial stake in private lender Kotak Mahindra
Bank through block deals tomorrow, according to ET NOW. The Fund will sell about 3.3
crore shares or a 1.6% stake in the bank at a price range of Rs 1,792-1,886. The lower
end of the floor price is about a 5% discount. As of the March quarter, the Canada
Pension Fund held a 4.6% stake in the bank. Canada Pension Plan Investment Board
operates as an investment management company. The fund offers pension
management services, as well as provides investments such as private equity, real
assets, and fixed income. According to the latest shareholding pattern available with
the exchanges, foreign investors own a significant stake of 36.7% in the bank. Among
other public shareholders, LIC has about 6.21% stake and mutual funds own 10.99%.
Indian rates at three-month high on low
supplies, Paddy price hike.
• Prices of rice exported from top hub India jumped to their
highest since early March this week, driven by tight supplies
and a move to raise the government-mandated price for
paddy, while rates for the staple from Thailand eased on
lower demand.

• India's 5% broken parboiled variety was quoted at

$388-$395 per tonne, up from last week's $375-$380.

• India on Wednesday raised the price at which it will buy

new-season common rice paddy from farmers by 7% to 2,183
rupees per 100 kg.
 India open to FTA negotiations bilaterally or
individually with Africa: Piyush Goyal
1)The Minister for Commerce and Industry, Piyush Goyal,
discussed with the visiting Ambsaddors from Africa how New
Delhi plans to work towards making Africa a top priority for trade
and said India is open for Free Trade Agreements (FTA) with
African nations.
2)This is the beginning of a new engagement and reaffirmed that
India would act as a trusted partner to expand trade, commerce,
business, investment and opportunities between the two nations.
3)India is open to FTA negotiations bilaterally or individually with
African countries or Africa as a whole.
4)Union Minister for Commerce and Industry Piyush Goyal hosted
15 ambassadors from African countries on Thursday to discuss
ways to strengthen trade and investment ties between India and
the African countries.

India leads the world in digital payment,

as per MyGovIndia Data
• According to information released on June 10 by the government's citizen participation
platform MyGovIndia, India has topped the world rankings for digital payments for the year
2022.
• There were 89.5 million digital transactions in the nation during the year under review. In
2022, India accounted for 46% of all real-time payments made worldwide, which was higher than
the total digital payments made by the following four leading nations.
• India has achieved new digital payment milestones in terms of volume and value, according to
reports from the news agency ANI and statements from RBI specialists. The analysts said that
this demonstrates both the strength of India's financial ecosystem and the nation's acceptance
of digital technology.
• Brazil, which had 29.2 million digital transactions, came in second. Third place went to China,
which had 17.6 million transactions.
• Fourth place with 16.5 million transactions was Thailand. With 8 million transactions, South
Korea came in second, according to MyGovIndia data.
Mobile GST hike gives government more
than PLI outlay
The incremental GST of 6% on mobile phones has raked in Rs 42,897 crore over the
last three financial years, topping the nearly Rs 39,000-crore outlay of the production-
linked incentive (PLI) scheme for manufacturing of smartphones and making the
government scheme self-sustaining, according to industry executives.
In fact, the five-year smartphone PLI scheme will leave a revenue surplus of Rs 11,000
crore if only the Centre's GST (goods and services tax) collections are taken into
consideration, industry body India Cellular and Electronics Association (ICEA)
pointed out in a June 5 letter to the finance ministry.
The government had increased the GST on mobile phones to 18% from 12% on April 1,
2020, the day the smartphone PLI scheme was announced.
As per India ICEA, over the last three financial years-- FY21 to FY23--the incremental
GST of 6% has resulted in an additional cumulative revenue of Rs 42,897 crore. The
total GST on mobile phones for the three-year period stood at Rs 1,28,691 crore.
The final adjusted total outlay for the smartphone PLI scheme for a 5-year period now
stands at Rs 38,601 crore as against the original Rs 41,000 crore, as iPhone-maker
Pegatron started a year late. So far, the total disbursement for smartphone PLI stands
at Rs 1,644 crore.
“Currently, since only Rs 1,644 crore has been claimed as part of the PLI scheme till
March 31, 2023, the incremental GST has created a surplus of Rs 41,253 crore,” the
ICEA said in the letter addressed to revenue secretary Sanjay Malhotra.
Calculating that, the incremental GST over the course of the smartphone PLI scheme
would be around Rs 1,01,697 crore, the ICEA said. Of this, the central government will
collect Rs 50,849 crore while retaining only its 50% portion, far more than the total
outlay of the scheme.
“In summary, even if only the Centre's GST was to be taken into consideration, the
smartphone PLI scheme over the five-year period is 100% self-sustaining and will
leave a revenue surplus of Rs 11,000 crore,” the industry body said.
The total GST contribution during the tenure of the smartphone PLI scheme is
expected to the tune of over Rs 3 lakh crore. The scheme was deferred by one year for
the majority of the companies due to the pandemic and will now end in 2025-26. All the
selected companies, barring Samsung, have taken the deferment.
 India, China To Contribute Half Of
Global Growth This Year: IMF Report
China and India will account for more than half of this year's
global growth, the International Monetary Fund predicts,
underscoring the Asia-Pacific region's strength amid rising
uncertainty over the U.S. economy.
China will contribute 34.9% of the global growth, and India
15.4%, according to the IMF. These add up to 50.3%.
The Asia-Pacific region as a whole is projected to drive about
70% of global international economic growth, increasing its
presence as Western growth slows.

India tops digital payments rankings globally,

shows MyGovIndia data
• India has topped the global rankings in digital payments for the year
2022, data from govt's citizen engagement platform MyGovindia showed
on June 10.
• During the year under review, there were 89.5 million digital
transactions in the country. India accounted for 46 per cent of the global
real-time payments in 2022, which was more than the combined digital
payments the next four top countries.
• India has witnessed new milestones in digital payments, in both value
and volume terms, new agency ANI reported citing statements by RBI
experts. This shows the robustness of India's payment ecosystem as well
as the country's acceptance of the digital, the experts pointed out.
•
Brazil took the second place, with the country clocking 29.2 million
digital transactions. China followed at third spot with 17.6 million
transactions.
 Editors
Shorya Jain Kavya Bansal
XII-C XII-A
(Chief Editor) (Vice Chief Editor)
Shambhavi Varma Angelina Tamang
X-D X-D
(Editor) (Editor)

Columnists
Prakriti Ghosh Paridhi Gupta
XI-A
X-C

Shrey Choudhary Anushka maheshwari

XII-A XIth A

Janvi Singh
Pavni Kumra XI-B Pranvi Aggarwal
XI-A X-D

Aarushi Shivansh Tyagi

XI B XI B

Dhanya Aggarwal KAMYA AGARWAL

XII D XI D